Title fraud and mortgage fraud has been in the news the past month. There were several articles that highlighted the increasing number of title fraud and mortgage fraud in Canada. Title fraud is when the fraudster sells your house and the title of the house is transferred to a third party. Mortgage fraud is when the fraudster uses your house as collateral for a mortgage loan.
The easiest targets are homes that are paid off and the owners are out of the country. The two cases that were successful in BC involved owners who were out of the country. The fraudsters were able to manipulate property management company to help them fool the realtors and lawyers.
In BC, the record at the land titles office has the last word in terms of ownership as long as it was not obtained fraudulently. What does this mean? If the fraudster sold your house to an unwitting innocent third party and the title has been transferred then you have lost your house. Your recourse would be to prove your case and recover your money from the Assurance Fund, a fund set up to protect owners against losses from title fraud. A mortgage fraud is less devastating, but you would have to go through a lengthy process to prove your innocence to nullify that mortgage.
According to the Land Title and Survey Authority of BC (LTSA), 2 homes were fraudulently sold since 2019. Considering they process 800,000 to a million transactions a year, it is very rare. However, you still don’t want to be that unlucky person having to deal with this.
The best way to prevent this from happening when you have a house that is cleared title is to obtain a duplicate title certificate from the LTSA. The title cannot be transferred or a mortgage registered until that duplicate is returned to the LTSA. However, this means if you lose it, you will not be able to sell your house. And it is expensive and lengthy to get another copy. So don’t lose it.
Less perfect solutions include getting a home equity line of credit. Because fraudsters prefer a clear title, this will make you less of a target. You can also pay for a credit monitoring service. This will reduce your risk of mortgage fraud because the bank usually will pull your credit upon receiving a mortgage application. Creating a Google alert for your address is a great way to get alerted when someone tries to list your property for sale. In the future, LTSA will come out with a title monitoring service that will alert you by email when an application is made that will affect your title. Currently, it is only accessible by real estate professionals such as a notary, lawyer, land surveyor or registry agent. And finally you can get title insurance. It does not reduce your chance of fraud, but when it happens the insurance company’s legal team will handle everything for you and protect you against any losses.
